Bring Canada Back: Setting a Financial Recovery Plan

Consolidated Credit is helping bring you back to financial stability.

Consolidated Credit Counseling Services of Canada: Helping Bring Canada BackWeeks of quarantines and business closures have left Canadians living in financial chaos. The jobless rate soared to 13% in April.[1] Nearly two-thirds of the Canadian households surveyed by TransUnion reported that their household income had been negatively impacted by this crisis.[2] However, as provinces take steps to begin reopening, there are signs that a recovery may finally be on its way, at least for some.

As people get back to work, it’s important to set a financial recovery plan. Many Canadians need to pay down credit cards and other unsecured debts they may have been forced to take on during the crisis. With that in mind, Consolidated Credit has launched our Bring Canada Back Plan to help people customize strategies to regain financial stability.

How Consolidated Credit can help bring you back to financial stability

Step 1: Receive a free debt and budget analysis from a trained credit counsellor

A trained credit counsellor will help you set up a realistic budget based on your current income and financial situation. This budget will set the foundation for your financial recovery plan.

The counsellor will also gather information about your debts. This will help them understand:

  1. How much you owe
  2. Which bills are current and which are falling behind
  3. How many accounts you have in deferment or forbearance

Step 2: Get answers and learn about your financial options

The credit counsellor can also answer any questions you have about your bills, debts, credit, and budget. Then they will help you understand the options you have to get out of debt, including:

Based on your budget and debt, the counsellor will make a recommendation on the best option to use, given your financial situation and goals.

Step 3: If debt management is right for you, the counsellor can help you customize a plan

A debt management plan is a repayment plan that pays off credit card debt more efficiently by minimizing interest. You pay back everything you owe, but with little to no APR applied to your balances. This allows you to get out of debt faster, even though in many cases you may pay less in total each month.

If this type of plan is the best option for you, Consolidated Credit will waive the initial setup fee, so you can start saving immediately.

This plan may also help address challenges with other types of unsecured debt, including:

  • Personal loans
  • Lines of Credit (LOCs)
  • Payday loans

More debts to consider as you set your financial recovery plan

The Bring Canada Back plan will help you set a budget and plan to eliminate your credit card debt. However, you may have other obligations that you need to consider:

Many lenders have allowed borrowers to defer payments if their income has been affected by COVID-19. Deferrals allow you to skip payments without facing penalties. However, a deferral is not forgiveness.

You still owe the money you borrowed and those payments you missed. The lender still expects you to pay off the loan on time. Thus, you will need to catch up on payments once the deferral period ends.

In some cases, a lender may expect you to pay back the entire amount in a lump sum, or your future payments many increase permanently. In either case, you need to talk to the lender to make sure you know what will happen as you move forward.

In most cases, you will want to spread the catchup payments out over time, so it’s easier to manage within your budget. Be certain you know when your payments will start and how much you will be expected to pay.

Also, check your balances as you get ready to begin making payments again. Deferral programs do not suspend interest charges. Unfortunately, while your payments were paused, these debts were growing with accrued monthly interest charges. Thus, you may owe more than you think you do.

One area that may provide some breathing room in your budget is federal student loan payments. Both payments and interest charges are suspended until September 30, 2020.

This means that you do not need to make any payments until this fall. What’s more, the balances are not growing with accrued monthly interest charges. As such, you can continue to skip these payments if you need to use those funds to catch up on other debts and bills.

However, this break on payments does not apply to provincial or territorial loan payments to private financial institutions. In this case, you need to work directly with the financial institution servicing the loan.

If the institution offered payment deferral, make sure you know when the deferral period will end, as well as how the deferral may affect your future payments. Also, ask about interest charges.

If you owe money to the Canada Revenue Agency (CRA) for the 2019 tax year, the money is due by September 1, 2020. Make sure to plan accordingly, so you can pay your taxes on time and avoid penalties. Interest and penalties are currently paused until September 1.

If COVID-19 had any significant impact on your income, there could be other bills that are delinquent, such as bills for utilities and mobile services. Make sure to talk with your credit counsellor about any bills that are behind, so you can factor catchup payments into your budget to bring those accounts current.

Your counsellor can help you make sure you get everything caught up, so you don’t need to worry about any arrears getting sent to collections.

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